BPA chief outlines challenges

Posted: Tuesday, February 06, 2001

By HUNTER T. GEORGEAssociated Press Writer

OLYMPIA, Wash. (AP) -- For the past few weeks, Washington state lawmakers angry about the impact of California's energy crisis on the Pacific Northwest have questioned the wisdom of continuing to send electricity to the Golden State.

Their anger boiled over last week as some Republicans in the state House of Representatives suggested suing the state of California for damages.

On Monday, the Bonneville Power Administration's chief executive urged legislators to have a little more patience with their sunny neighbor.

Steve Wright, BPA's acting administrator, said the Northwest's long-standing tradition of swapping power with California during winter and summer months has benefited both regions, even if the sharing is mostly one-way at present.

Wright said California's move to deregulate its electricity market was a leading cause of the volatility that has seen wholesale prices jump from $30 per kilowatt-hour to more than $3,000 on several occasions, a situation that has left some manufacturing plants idle.

But other causes include an imbalance between supply and demand that was ''unmasked'' by a drought that has diminished the reservoirs that feed the Northwest's network of hydroelectric dams, as well as a lack of transmission lines and higher costs for natural gas, he said.

The issue now for the BPA, Wright said, is to figure out how to reduce costs while protecting the environment and continuing to make payments on the agency's $7 billion debt. And it must do so while rebuffing challenges from congressional delegations representing other regions of the country suffering from ''energy envy,'' as well as private energy marketers who also would like to get their hands on the Northwest's electricity supply, he said.

Wright offered this overview of a solution:

--Energy conservation by individuals, utilities, businesses and government must continue.

--More water must continue to be run through the dams, although that strategy hurts salmon while producing more electricity. ''I have to say, I don't like it, but I don't see any other way out of it,'' Wright said, adding that the BPA cannot maintain its $200 million annual investment in salmon-saving efforts if the agency goes broke.

--California must stabilize its market by shifting its energy purchases to long-term contracts, instead of the spot market.

--Energy marketers should be challenged to justify the high prices they're charging.

--New power plants must be built, along with more transmission lines and more pipelines and storage facilities for natural gas, which fuels many power plants.

Lawmakers and Gov. Gary Locke are working on numerous proposals designed to stimulate development of power plants and encourage conservation.

Wright addressed the House energy committee and then a bipartisan gathering of lawmakers from the Senate, all of whom sought a better understanding of what's happening and how to fix it.

Some lawmakers questioned why the Northwest should keep sending power to California, which normally sends electricity north during the winter and already owes more than $100 million to the BPA for purchases made during the past few months.

Wright said it was important for lawmakers to understand how the network of dams works. On warm days such as Monday, electricity use in the Northwest is low, but the dams are still producing electricity that has to go somewhere. So it makes sense to sell the surplus power to California, which is part of the same grid as Washington, Wright said.

''Electrical power systems are built without regard to geographic or political boundaries,'' he said.

Wright also was asked about allegations that power generators and distributors are manipulating prices by keeping plants in California off-line. He said he has seen no evidence of such manipulation.